Africa's Rising Demand for Wheat: Trends,Drivers, and Policy Implications

This article analyses trends in wheat consumption and imports in sub‐Saharan Africa since 1980, and estimates the economic and demographic determinants of this rising demand for wheat. Results point to rising incomes, growing populations, and increasing women's labour‐force participation as key drivers. Urban wheat‐expenditure shares generally exceed rural ones and SSA's demand is met largely by imports and partly through domestic production on large‐scale farms. Rising demand may therefore entail few farm–non‐farm synergies and minimal prospects to spur broad‐based economic development. The article concludes by discussing policy options for African countries to meet their staple food needs while also promoting pro‐poor agricultural growth.     

Institutions and Policies for Pro‐poor Agricultural Growth

Global experience with pro‐poor growth and empirical work spanning India, Malawi and Zimbabwe demonstrates the importance of agricultural growth for poverty reduction in poor rural areas, while also pointing to the need for complementary non‐farm sector growth. Theoretical arguments, historical evidence and livelihoods modelling in poor medium‐potential rural economies suggest that, contrary to thinking dominating much of current development policy, subsidies to relieve critical seasonal credit and cash restraints and reduce market and input supply uncertainties need to help in ‘kick‐starting’ agricultural markets if increased smallholder productivity in food‐grains is to drive rural non‐farm growth. Establishing the base conditions for these to work, designing and implementing them to be effective, and then phasing them out are major challenges facing policymakers.     

Why Agriculture Remains a Viable Means of Poverty Reduction in Sub‐Saharan Africa: The Case of Ethiopia

Although there is much empirical evidence of the importance of agricultureled economic growth, there is a renewed emphasis in development circles on the industrial sector as the main driver of growth, even for the low‐income countries of sub‐Saharan Africa. This article applies a simplified model of agricultural growth linkages to illustrate the importance of agricultural growth for increasing employment and accelerating poverty reduction in Ethiopia. Achieving rapid agricultural growth, however, will require the engagement of small commercial farmers, large enough to adopt new technologies and produce significant marketed surpluses, but small and numerous enough to have spending patterns that drive a large, vibrant rural non‐farm sector.     

POPULATION GROWTH AND INDUSTRIALIZATION

The role of population growth in the process of industrialization is studied in a general equilibrium model. It provides a formal presentation of Rostow's insight of the role of a leading sector in industrialization. Population growth may lead to a shortage of food and a breakdown of the industrialization process. However, population growth may benefit the manufacturing sector in the adoption of increasing returns to scale technologies. Elasticity of demand for agricultural goods plays an important role in determining whether an improvement of agricultural technology or an increase of population is beneficial to the manufacturing sector. A comparison of China and Britain before the Industrial Revolution shows that research and development are necessary for sustained growth. Achieving industrialization independently requires a combination of a sufficiently large market size from the demand side and a sufficiently large supply of technologies from the supply side . ( JEL O14, E10, N10, Q01)     

Trying to stay ahead of the curve in Chile's economic development: exploring a way out of the middle‐income trap through pragmatic export development

Underneath impressive growth levels, the Chilean economy displays signs of being caught in a middle‐income trap. It has been unable to improve its productivity, increase the added value of its exports or upgrade its value chain. Its economy cannot compete either with low‐wage countries or highly productive, innovative countries. Its export strategy based on export promotion seems to have outlived its usefulness. It achieved remarkable quantitative success, but must now attend qualitative attributes. Instead of regarding market‐driven export promotion and state‐led export development as substitutes, this article proposes to view them as alternatives in different stages of development. To choose the appropriate time, more attention should be given to non‐traditional, structural indicators, like export sophistication and political‐institutional capabilities.     

Economywide Impact of Maize Export Bans on Agricultural Growth and Household Welfare in Tanzania: A Dynamic Computable General Equilibrium Model Analysis

Export bans have been frequently used by developing countries in recent years in an attempt to ensure domestic food supplies and insulate domestic market prices from international price hikes. This article uses Tanzania to examine the impact of export bans using a computable general equilibrium model. We find that banning cross‐border maize exports has very little effect on the national food price index and that the benefits from lower maize prices are captured primarily by urban households, while maize producer prices decrease significantly. The export ban further decreases the wage rate for low‐skilled labour and the returns to land, while returns to non‐agricultural capital and wage rates for skilled labour increase, further hurting poor rural households and thus increasing poverty for the country as a whole.     

Sector Programme Approaches: Will They Work in Agriculture?

This article explores why sector‐wide approaches, in which donor funds support a single sector plan under government leadership, have performed less well in agriculture than in the social sectors. Many problems stem from the more limited, more contested and shrinking role of the state in the agricultural sector. It is also argued that sector programmes have worked best where the key constraints on sector development are the responsibility of a single ministry, whereas agricultural development requires co‐ordinated interventions across sectors. The sector approach may have a limited role in delivering better focused agricultural services, but fundamental policy questions need to be resolved first. This is more likely if support for reforms is channelled through central economic ministries and other bodies outside the agriculture ministry.     

THE HOME MARKET EFFECT IN INTERNATIONAL ARMS TRADE

I show that military spending contributes to international arms proliferation through a push effect: large demand encourages production growth in the domestic market if transport costs are non‐negligible. Under increasing returns to scale, the country can then supply weapons on the global market at low prices. This is a manifestation of the home market effect (HME), which states that countries with higher demand for a differentiated good will be net exporters of that good. I construct a monopolistic competition model of international trade that accounts for differences in demand across countries, and test its predictions using post‐Cold War data. (JEL F1, H5, R1)     

Does the sectoral composition of growth affect child stunting reductions?

This article uses a natural experiment based on random and exogenous variations in temperature to examine whether the sectoral composition of growth has an effect on child stunting reductions. Agricultural growth is central to food security strategies in developing countries, as it is often considered the most effective way to fight (child) undernutrition. The evidence base to support the putative superior role of agricultural growth is, however, relatively weak, possibly because studies have ignored growth faltering. Accounting for the latter, we find that while both agricultural and non‐agricultural growth decrease stunting, agricultural growth is significantly superior to non‐agricultural growth in this regard. The estimated impacts are large, in that a 10% increase in agricultural GDP per capita reduces child stunting by 9.6% (as opposed to 8.4% for non‐agricultural).     

The new rural-urban labor mobility in China: Causes and implications

As the Chinese economy reforms, a huge new floating population of rural-urban migrants is transforming the urban labor force. This article explores some of the most important reasons for the emergence of the floating population in China. We argue that the neoclassical model alone is not adequate to explain the massive rural-urban internal migration underway in China. Instead, ideas drawn from both sociological theories of segmented markets and institutional economics are used to supplement the standard neoclassical explanation. We found that Chinese policy reforms in both rural and urban areas decreased the balkanization of labor markets and opened up employment opportunities for many rural-urban migrants. In rural areas, a set of agricultural market reforms, starting in 1978, increased farm incomes and simultaneously produced a large surplus labor supply. In urban areas, reforms beginning in the 1980s created an effective demand for rural migrants. Of particular importance was the development of a contract labor system and the emergence of a private sector.     

Migration Dynamics,Entrepreneurship, and African Development: Lessons from Malawi

Using data from Malawi, this study situates the discourse on migration, entrepreneurship, and development within the context of Africa's social realities. It examines self‐employment differences among three groups of migrants and corresponding group differences in agricultural and non‐agricultural self‐employment. International migrants are found to be more engaged in self‐employment than internal migrants. However, our results suggest that previous findings on the development‐related contributions of returning migrants from the West need to be appropriately contextualized. When returnees from the West invest in self‐employment, they typically shy away from Africa's largest economic sector – agriculture. In contrast, levels of self‐employment, especially in agricultural self‐employment, are highest among returning migrants and immigrants from other African countries, especially from those nearby. We also underscore the gendered dimensions of migrants’ contribution to African development by demonstrating that female migrants are more likely to be self‐employed in agriculture than male migrants. Furthermore, as human‐capital increases, migrants are more likely to concentrate their self‐employment activities in non‐agricultural activities and not in the agricultural sector. The study concludes using these findings to discuss key implications for policy and future research.     

Smallholder Preferences for Agri‐environmental Change at the Bhoj Wetland,India

Incentive‐based approaches have gained policy interest in linking change in agricultural land management with environmental conservation. This article investigates how scheme design influences smallholder farmers' decisions to switch to organic farming to reduce water pollution, drawing on a study at a Ramsar wetland site providing water for the city of Bhopal. Results from a choice experiment suggest that transitional payments are necessary to overcome farmer constraints to adopt organic farming, and that effective land certification has the potential to act as a self‐enforcing mechanism linking farmer incomes with wetland conservation benefits.     

Community Ventures and Access to Markets: The Role of Intermediaries in Marketing Rural Tourism Products

Many community‐based tourism ventures face marketing problems similar to those of other rural producers. They depend on intermediaries, such as private companies, membership organisations, public sector institutions and non‐governmental organisations, to facilitate market access. The article analyses the strengths and weaknesses of each type of intermediary, based on different levels of marketing support. Reflecting discussions about marketing assistance in other rural sectors, it argues that intermediary institutions have different areas of expertise and experience different constraints in terms of capacity‐building, marketing know‐how, financial resources and overall livelihood impacts. Instead of pursuing individual support strategies, it is therefore necessary to develop combined approaches of marketing assistance, depending on location, tourism resources and existing organisational structures.     

ASSET PRICE BUBBLES AND TECHNOLOGICAL INNOVATION

We introduce borrowing constraints into a two‐sector Schumpeterian growth model and examine the impact of asset price bubbles on innovation. In this environment, rational bubbles arise when the intermediate good producing R&D sector is faced with adverse productivity shocks. Importantly, these bubbles help alleviate credit constraints and facilitate innovation in the stagnant economy. On the policy front, we make a case for debt financed credit to the R&D sector. Further, we establish that a constant credit growth rule (akin to the Friedman rule) outperforms the often prescribed counter‐cyclical “lean against the wind” credit policy. (JEL E32, E44, O40)     

The Native‐Immigrant Income Gap among the Self‐Employed in Sweden

During recent years we have observed that non‐western immigrants are overrepresented among the self‐employed in Sweden. A reason for this might be the difficulties faced by immigrants in the labour market. The unemployment rate among non‐western immigrants in Sweden is higher than among natives with similar human capital characteristics. While this is a well‐established result, we do not know much about how self‐employed immigrants perform economically compared to their native counterparts. The purpose of this paper is to describe and analyse the incomes of self‐employed immigrants and natives in Sweden. We will also discuss possible explanations for the income gap we find. We use Swedish register data for the period 1998 to 2002 and the population studied consists of individuals who have been continuously self‐employed during this period. By performing the analysis on this group of self‐employed we get a measure of the difference among the long‐term self‐employed. The outcome of interest is the average income over the period. Income regressions are estimated using both OLS and quantile regressions. We find that self‐employed immigrants receive significantly lower incomes than their native counterparts when controlling for individual characteristics, industry and start‐up year of the firm. The income gap is larger for non‐western immigrants than for western immigrants. Quantile regressions show that the native‐immigrant income gap is smaller at the top than at the bottom of the income distribution. Several possible explanations for the native‐immigrant income gap are discussed. One possible explanation is that immigrants have a lower reservation wage and accepts staying in business receiving a lower income than comparable natives. Another explanation might be that there is discrimination against self‐employed immigrants that will lead to lower incomes. There can be consumer discrimination or discrimination from banks and real estate owners.     

OFFSHORING PRODUCTION: A SIMPLE MODEL OF WAGES,PRODUCTIVITY, AND GROWTH

We examine the relationship between offshoring and the labor market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to offshoring and reduces employment in the manufacturing sector. Displaced workers move into traditional and innovation sectors according to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter‐sectoral labor market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of offshoring activities in the U.S. manufacturing sector since 2004. (JEL F16, F23, J24)     

Rethinking Trade Preferences for Sub‐Saharan Africa: How Can Trade in Tasks Be the Potential Lifeline?

Policy‐related discussion on assisting countries to make use of trade preferences tends to focus on the provision of hard infrastructure to facilitate external economies from modern‐sector exports. This is as opposed to harnessing potential knowledge spillovers. This omission is emblematic of tensions within new trade/new growth theory. Using two country case studies in Asia – Bangladesh and Cambodia – this article shows how different approaches towards making use of trade preferences have resulted in divergent industrial structures and firm‐level technological capability indicators. Less stringent rules of origin requirements may offer new opportunities for late industrialisers in sub‐Saharan Africa to tap into the modern export sector, but a more interventionist approach towards harnessing knowledge spillovers may also be necessary.     

INFORMAL LABOR MARKETS AND ON‐THE‐JOB TRAINING: EVIDENCE FROM WAGE DATA

This study examines whether informal sector jobs are a source of training for young less‐educated workers. Controlling for worker and job characteristics, it is found that, in the early years of workers' careers in Mexico, wage growth in the informal sector is higher than in the formal sector. This result is consistent with general human capital investment on‐the‐job if the informal labor market is more competitive than the formal labor market due to frictions generated by labor regulations. (JEL O17, J24, J310)     

SQUEALER DEALERS: THE MARKET FOR INFORMATION IN FEDERAL DRUG TRAFFICKING PROSECUTIONS

Federal data on drug trafficking sentences are used to determine factors that affect market quantities of providing information against other defendants (i.e., defendant probabilities of receiving testimony‐related sentence reductions) and market prices of information (i.e., the sizes of such sentence reductions). Women and better‐educated defendants experience high demand (higher quantities and prices) for information. Blacks, Hispanics, and non‐U.S. citizens experience low demand. Defendants expecting longer sentences have higher supply of information. Conditional on expected sentence, crack dealers, high‐level dealers, and dealers with long criminal histories experience low demand, while low‐level dealers experience high demand. Women of all races experience high demand for information. (JEL K14, J15, J16)     

THE PHYSICIAN LABOR MARKET IN A MANAGED CARE-DOMINATED ENVIRONMENT

The belief that doctors respond to declining demand by treating patients more aggressively has created skepticism about relying on market forces to restructure physician supply. We argue that even if the physician labor market is dysfunctional under fee-for-service incentives, it can perform better as managed care becomes dominant. Our model implies a nonlinear effect of managed care penetration on incomes. Physicians can offset most or all of initial declines in demand, but cannot insulate themselves indefinitely. This may explain the observation that, until recently, the growth of managed care has not been accompanied by large physician income changes. ( JEL III, J31)